Trade Updates for Week of May 15, 2019

United States Court of International Trade

Court Sustained Commerce’s Surrogate Country and Factors of Production Determinations Products in Part and Remanded in Part

Before the Court in Jiaxing Brother Fastener Co. et. al. v. United States et. al., Slip Op. 19-55, Court No. 14-00316 (May 9, 2019) was a challenge to Commerce’s final determination in the fourth administrative review of the 2009 antidumping duty order on certain steel threaded rod from China.  Plaintiffs argued Commerce’s selection of Thailand as the primary surrogate country for Jiaxing’s STR products was unlawful, that the valuation of Jiaxing’s steel wire rod factor of production (“FOP”), brokerage and handling (“B&H”) costs, and surrogate financial ratios related to labor, were unsupported by substantial evidence. For the following reasons the Court sustained Commerce in part and remanded in part.

“Where the exporting country has a nonmarket economy … Commerce identifies one or more market economy countries to serve as a surrogate … on the basis of the value of the factors of production in the relevant surrogate country.” Id. at 7. “Commerce must value the factors of production through the best available information.” Id. The Court sustained Commerce’s determination because “Thailand was the only country for which there was specific steel input data as well as contemporaneous financial statements from producers of comparable merchandise.” Id. at 9. The next issue the Court considered was the specific surrogate valuation issues raised by plaintiff. In regards to the steel wire rod FOP, the Court sustained Commerce because the agency was unable to accurately use plaintiffs suggested basis. In regards to the labor cost, the Court remanded the issue because Commerce failed to consider record evidence of the labor divisions within the industry. The Court sustained the use of Doing Business 2014: Thailand as the basis for the B&H cost because plaintiff failed to find better data to use. However, the Court remanded Commerce’s decisions not to make adjustments to the cost because the letter of credit and shipping container cost determinations needed further explanation in light of record evidence.


Court Grants Joint Motion to Dismiss Litigation

Before the Court in One World Techs., Inc.  v. United States et. al., Slip Op. 19-56, Court No. 19-00017 (May 9, 2019) was a joint motion to dismiss or stay the litigation before the Court. The case involved Customs determination that One World’s redesigned garage door openers (“GDO”) infringed on a patent. The United States International Trade Commission (“ITC”) and the Chamberlin Group joined the litigation as defendant-intervenors.  The Court had previously issued a temporary restraining order and preliminary injunction directing Defendants not to seize shipments of the GDO. The plaintiff has since notified the court of the ITC’s Chief Administrative Law Judge’s determination that the Redesigned GDOs do not infringe on any patent.  On May 1, 2019 plaintiffs and defendants reached an agreement to settle the case.  However, Chamberlin Group, did not agree to the dismissal. For the following reasons the Court approved the dismissal of the case.

Under USCIT Rule 41(a)(2) “an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper.” Id. at 12. “Legal prejudice to the defendant is the foremost factor for the court to consider in exercising its discretion over a Rule 41(a)(2) motion to dismiss.” Id. The Court said that there was no prejudice against the United States and ITC because they consented to the motion. The Court found Chamberlain could not be prejudiced because its interests were limited as the company filed no crossclaims or counterclaims, and because the company failed to demonstrate any prejudice to the Court. The Court said Chamberlain benefits, in a way, because the dismissal grants Chamberlain’s previous motion to dismiss. The Court also exercised “its discretion to retain jurisdiction over enforcement of and compliance with the Settlement Agreement.” Id. at 15.